College Connect: A College Students Gets Expert Advice on Her Five Key Questions

Posted By David Wilhite

By Rachel Hinkle

Taylor Liszewski, an advertising major at the University of Georgia, had several questions about personal finance and budgeting as she prepares for life beyond college. College Connect turned to Matt Goren, an assistant professor at UGA who teaches Introduction to Personal Finance, for answers.

Q: Is it a bad idea to have a credit card at a young age?

A: No, absolutely not: having a credit card at a young age is a great way to build credit, get cash back on purchases, get some better identity theft protection than a debit card, have access to free insurance policies, and have an extra credit limit in case of emergencies. Problems with credit cards arise when people routinely overspend on them. Users who treat credit cards as if they are debit cards essentially get all the perks without any of the drawbacks of over-spending such as debt and penalties. The trick is truly just discipline. Some people say credit cards are only for people with a lot of money. But if you don’t have any money, it may actually be worse to have a debit card, because the fees of over-drafting on a debit card are generally higher than the interest paid on a credit card.

Q: What is the best way to start paying off my student loans?

A: Increase your income and cut down on expenses. There generally is no “trick” to it: you need to be making more money than you’re spending. Different repayment options can help you lower your monthly required payments in case you’re having trouble meeting the minimums. And, if you’re fortunate enough to be making over about $80,000 a year, companies like SoFi and CommonBond will help you refinance your loans down to a lower interest rate, saving you money on interest payments.

Q: For my first job, is a salary (negotiable) or should I take what I can get?

A: Salary is almost always up for negotiation. If the job isn’t willing to negotiate with you, that to me is a sign that they don’t really value you or your skills… maybe best to get a different job if possible. Hopefully, you have accumulated good experience that makes you look like a strong candidate for this and other jobs. If not, there is no time like the present! Invest in yourself and you will eventually be able to dictate your terms.

Q: Should I keep my money in the form of cash or in the bank? Is one more safe than the other?

A: You should keep as little money in cash as possible. If our banking industry shuts down, your cash will be worthless anyway! Even if you earned that cash illegally or “under the table,” it should still go live in a bank. Cash can get stolen and I’ve got horror stories from former clients to prove it. And, that cash isn’t earning any interest – at least with an online savings account, you can get 1 percent “for free.”

Q: Is it better to pay off your bills monthly or the minimum (and) pay them off over time?

A: Pay off all bills in full as quickly as possible (with very rare exceptions, such as you got a 0 percent financing deal on a car). Not paying bills usually means extra fees and interest charges. Plus, the company is likely to report you to a credit agency, lowering your credit score.

Rachel Hinkle is majoring in journalism at the University of Georgia’s Grady College of Journalism and Mass Communication.

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